Software industry entry strategies for developing countries: A “walking on two legs” proposition

Abstract

Two themes run through the following analysis. First, countries without a relatively active and up-to-date software sector will find it increasingly difficult to “catch up” in terms of capital outlays, labor, skills, and the growing importance of technology changes, organization and management in software production. They will not have, for example, software management experience to undertake increasingly large and complex software development projects; a quality consciousness; and the institutional and support infrastructure for marketing and forming product development alliances with dominant international firms in the sector. Second, the learning curves for domestic and international market activities are quite different, the domestic software market being an important base for skills, experience and establishing a track record that may later be applied to exports. Two developing countries — India and Brazil — have used different development strategies for their software industries and, as could be expected, with disparate results. Both the Brazilian and the Indian software industries are trying to“walk on one leg,” the domestic leg in the case of Brazil and the export leg in the case of India. Both countries have at least some potential for moving to a two-legged model. Assessment of these two industries suggests that countries need to pay more attention to domestic opportunities, since these have high returns in terms of gaining experience and innovation in software production, and provide training that allows a broadening of software exports.